Climate change is behind sinking coastal property values

Salisbury
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Coastal properties have long been in high demand, offering stunning views of the ocean at a premium price tag. With rising sea levels and increased coastal flooding, how concerned should property owners be about property values?

From Maine on down the Atlantic Coast to Florida and the Gulf Coast and the West Coast of the United States, flooding has gone up by 200–400 percent nationally in just the last 20 years, according to data provided by First Street Foundation, a non-profit tech organization that works to quantify and communicate the impacts of sea level rise and flooding.

First Street recently announced the addition of four new coastal states, Maine, New Hampshire, Massachusetts, and Rhode Island, that homeowners can now access on FloodiQ.com, to search for their property or city’s flood risk. The four new states join the seven existing coastal states on the site, including Connecticut.

The importance of this latest addition to FloodiQ.com is related to the news that the combined properties at risk from frequent tidal flooding in Maine, New Hampshire, Massachusetts, and Rhode Island total over 1.7 million, with over $403.1 million in relative home values missed out on between 2005 and 2017.

Steven A. McAlpine, the Head of Data Science at First Street Foundation, and Dr. Jeremy R. Porter, a Columbia University professor, and First Street Foundation statistical consultant, first established their peer-reviewed methodology with an analysis of the Miami-Dade County real estate market.

Their Miami-Dade study was published in the journal Population Research and Policy Review and showed $465 million was lost from 2005 to 2017 due to tidal flooding driven by sea level rise.

“From Maine to Texas, we have seen the same phenomenon,” said Porter. “Increased tidal flooding has led to a loss in home value appreciation. We expect this trend to not only continue in the coming years but to accelerate along with the accelerating rate of sea level rise.”

The widespread flooding in Houston shut down several major highways

Thomas B. Shea, AFP

Should property owners be concerned?

Many climate scientists point to the studies done that show rising sea levels and the impact this is having on erosion and loss of coastal property. Then, there are a few climate scientists that note shortcomings in the studies. We can add in the real estate experts who say they have not seen any decrease in the demand for coastal properties, according to the Associated Press.

It looks like the ball has been thrown into the court of coastal homeowners and communities as to how much they should be concerned, and this makes for a real problem for homeowners trying to sell the property they have put a life's fortune into for 20 years or so.

Take Nancy Meehan, 71, who is considering putting her coastal condo in Salisbury up for sale this year. She has lived in her home for nearly 20 years and it has been spared from the worst impacts of rising tides and flooding. But she also notes the flooding appears to be worsening along roads and lower properties.

“All my life savings is in my home,” Meehan said of the four-bedroom, two-bathroom condo, which she bought for $135,000. “I can’t lose that equity.”

Downtown Salisbury Massachusetts in 2004.

Decumanus at English Wikipedia

Meehan is but one of a number of homeowners that have, or will experience a drop in their property's value when they try to sell their homes. And drops in property value would shatter a community like Salisbury, which relies almost exclusively on beachfront real estate taxes to fund schools, police and other basic services, according to researchers.

“People are looking at losing tens of thousands of dollars of relative value on their homes,” Dr. Porter says. “Not everyone can sustain that.”

And all this is sort of strange because coastal home prices have been rising faster than homes further from the sea for the past nine years, according to the National Association of Realtors. "Waterfront homes are still generally more expensive than their peers just one block inland," said Lawrence Yun, the association’s chief economist.

“The price differential is still there,” he said. “Consumers are clearly mindful that these climate change impacts could be within the window of a 30-year mortgage, but their current behavior still implies that to have a view of the ocean is more desirable.”

The point is that all the studies clearly attempt to quantify what the insurance industry and the federal government had long suspected: that climate change is having tangible harm on home values, said S. Jeffress Williams, a scientist emeritus with the U.S. Geological Survey in Woods Hole, Massachusetts.